PracticeConsultingByers’ bankruptcy plans risk fraud

Byers' bankruptcy plans risk fraud

Bankruptcy experts have warned that government proposals to lift the 'stigma' of bankruptcy and hand honest failures a second chance at business would 'open the floodgates for fraud'.

Trade secretary Stephen Byers last week threw a lifeline to business failures as part of a shake-up of insolvency laws that aims to encourage entrepreneurs to start-up new firms.

The rule relaxation will allow bankrupts whose businesses fail for reasons beyond their control to return to set-up and trade again within six months of going under.

Tough provisions would also allow the Official Receiver to crack down on dishonest bankrupts with a 15-year ban in line with rules disqualifying company directors.

Insolvency specialists believe the measures will squeeze creditors and cause even more bankruptcies.

‘If bankruptcy proceedings degenerate into saying “sorry, guv”, and then back to business as usual, we are in danger of creating systemic bankruptcy and opening the floodgates for fraud’, warned bankruptcy specialist Louise Brittain at Baker Tilly.

‘The point of bankruptcy is to recognise the debt to creditors and make arrangements to pay them – otherwise, the process is pointless.’Bankrupts can also expect ‘financial counselling’ and exemption on up to £20,000 invested in a home if they can prove an equal amount was pumped into a business.

‘We must remove the stigma surrounding bankruptcy’, Byers said. ‘Too many people are unwilling to set up their own business because they are worried about the consequences of failure.’

Roger Oldfield, vice-president of R3m the former Association of Business Recovery Professionals, also warned the measures would not protect creditors sufficiently.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer